Seven Basic Quality Management Tools

Quality tools charts generator - Create your charts online FOR FREE

Seven Basic Quality tools documents

Definition of Quality Management -- it is a method for ensuring that all the activities necessary to design, develop and implement a
product or service are effective and efficient with respect to the system and its performance. It is also a principle set by the company
to endure the continuous advocacy of quality services and products, or the further improvement of it.

Welcome to QT-charts knowledge base section.
Hopefully you will find some of them useful in your work. (Read articles below to learn more.)

T.P.
Wright first documented the idea of learning curves and its effect on
efficiency in the American aircraft industry in 1936. Wright found that there
was a pattern in the way that people learned; he found that per unit production
time reduced at an unvarying rate. Researchers took Wrights’ idea and expounded
upon it during World War II, where the emphasis was primarily on cost efficiency.

Since
World War II, the term learning curve has been expanded to other business and
non-business applications such management, distribution, team learning, health
care, investing, and even exercise. These more general applications of learning
curves are more accurately described by the term experience curve or practice
curve. For the purposes of this paper a learning curve describes the nonlinear
relationship between labor hours per unit and units of output, we assume a
single driver units of output for our purposes though more complex formulas
exist.

How
would a company use learning curves?

The most important question in regards to learning curves
is how would a company use learning curves in their business? One practical
application of learning curves is in forecasting budgets if companies can
accurately estimate the rate of learning they can also estimate product cost.
Understanding cost is also paramount to pricing decisions, should the company
follow a prestige pricing or price skimming strategy. Determining human
resource needs is another application in which learning curves can be used, as
companies become more efficient they may eliminate jobs or choose to move them
to other functional areas. However as G.J. Steven points out, “It is important to
appreciate that the learning curve is not a cost-reduction technique since the
rate of future time reduction can be predicted by the learning curve model.
Cost reduction only occurs if management action is taken, for example, to
increase the rate of time reduction by providing additional training, provision
of better tools etc” (Steven 65).

Basic
Learning Curve Calculations

There are different models for learning curves
that have been proposed and used by businesses. None are generally accepted as
being superior. For explanatory purposes we will use the Incremental Unit-Time
Learning Model. The following mathematical background is borrowed in part from
Horngren, Foster, and Datars’ Cost Accounting textbook. This model is based on
the equation y = aXb where y = the time to produce the last unit of
output, a = the time to produce the first unit of output, X= cumulative number
of units produced, and b= the rate of learning. The rate of learning is
calculated by taking the natural log of the percentage of learning and dividing
by the natural log of 2 ( ln(% of learning)/ ln2). Ultimately what this
equation is describing is that the incremental unit time decreases at a
constant rate each time the quantity of units produced doubles. The lower your
percentage of learning is the faster individual units are produced and thus the
faster average time per unit. As a practical matter there is no hard and fast
rule for determining the percentage of learning, in Figure 1 a 90% learning
curve is assumed.

Figure:
1

Cumulative units

Individual unit
time (y): Labor hours

Cumulative
total time: Labor hours

Cumulative
average time per unit: Labor hours

1

10

10

10.00

2

9

19

9.50

3

8.46

27.46

9.15

4

8.1

35.56

8.89

5

7.83

43.39

8.68

6

7.62

51.01

8.50

7

7.43

58.44

8.35

8

7.29

65.73

8.22

9

7.16

72.89

8.10

10

7.05

79.94

7.99

11

6.95

86.89

7.90

12

6.85

93.74

7.81

13

6.77

100.51

7.73

14

6.7

107.21

7.66

15

6.63

113.84

7.59

16

6.56

120.4

7.53

Once the percentage of learning is established the
numbers can be easily generated using an excel spreadsheet. The individual unit
times are based on the equation y = a Xbwhere a and b will be constant throughout
the range of units. Notice how quickly the effects of the learning curve takes
place by the time just 16 units are produced the average time per unit has
dropped by almost 25%. If the right percentage of learning has been applied a
manager could now take this data and produce production schedules, delivery
plans, personnel staffing schedules, as well as budget forecasts. The benefits
of learning curves were underscored by professor Charles Bailey at the
University of Central Florida when he stated, “The potential applications of
learning curves far outstrip their current usage” (Anthes 44).

The learning curve is effected by several outside forces
not the least of which is human attributes. As Roark and Briscoe explain, “Just
as the areas of standard costing and budgeting have had to incorporate behavioral
concepts to increase their effectiveness, so must learning curve applications
include behavioral considerations” (Briscoe 32). In other words even the most
accurate performance estimates does not insure that our estimates will be
accurate. Because we are dealing with human beings planned performance and
actual performance can vary for a myriad of reasons.

A discussion of learning curves would not be complete
without mentioning that all learning is not created equal. For example, a
computer custom manufacturing facility, if an engineer designs a way put an
external jumper wire into a board it leads to greater effects on the learning
curve than would a single production worker learning to solder on the external
jumper wire faster. In fact the engineers breakthrough would negate the
learning of the production worker by eliminating the need for the soldering
altogether. Learning is influenced in different magnitudes at various points in
the production process. Briscoe and Roark define these points as sources of
learning, which they break into three basic categories preproduction,
intratask, and exoteric learning. These sources could easily be termed before,
during, and after production. Briscoe and Roark reinforce the manufacturing
facility example when they state, “Learning that is achieved from one type will
tend to reduce the learning that can be obtained from another” (36).

Real
World Application

As previously mentioned learning curves can
be used for a number of applications, perhaps the most basic of these is
budgeting. According to G.J. Steven one company that is utilizing the benefits
of learning curves is Above & Beyond Ltd., a manufacturer of
high-technology guidance systems. For companies who budget for high-technology
projects, knowing the labor costs associated with that project is critical.
Labor time and cost tend to be very high because such projects are highly
technical and are being performed by very highly paid specialists. Using
learning curves helps Above & Beyond determine more realistic task times,
which improves pricing decisions and the overall competitiveness of the firm.

Additional Resources

Professor Charles
Bailey offers freeware for performing learning curve calculations at www.bus.ucf.edu/bailey. NASA also has
software available that allows anyone to perform learning curve calculations
online at www.jsc.nasa.gov/bu2/learn.html.
More powerful software is available for purchase by businesses from companies
like Production Technology of Tampa, Florida (Anthes43).

Conclusion

In
conclusion the idea behind learning curves is that people get better at
producing products as they get more experienced. Learning curves first
introduced in the 1930’s by T.P. Wright and were used initially in the aircraft
production industry. While several methods exist no one learning curve model is
generally accepted as the best. Learning curves are very easy to calculate
using computer spreadsheets, and the information provided can be used in making
decisions on everything from procurement to packaging. While learning curves
are useful it is not a cost-reduction technique, human attributes must be
considered and not all learning is equal to the organization. Learning curves
can be used to answer a myriad of questions for organizations, and their use
will only continue to grow as efficiency continues to become more of a
requirement and less of a goal.